A new proposal says that we should cancel student loan debt, but not the way you think.
Here’s what you need to know.
Cancel Student Loan Debt
In an op ed in Higher Education, former college president Roger Hull shares his solution to manage the nation’s $1.6 trillion of student loan debt. Would he outright cancel student loan debt? Would he make college free? No. Hull argues that outright student loan debt forgiveness and free college are not the answer. Why?
Is student loan forgiveness and free college the answer?
Hull says the current proposals for widespread student loan forgiveness and free college — many of which benefit member of Congress — have several flaws, including:
- “Nothing is truly free; someone always has to pay.”
- The public will pay through increased taxes.
- Supporters of student loan forgiveness and free college underestimate the true financial costs.
- The public does not receive a “significant return on that investment.”
- Local communities don’t benefit or participate in transformation.
As the former president of Beloit College and Union College, Hull is particularly sensitive to the impact on smaller private colleges. Hull notes that tuition-free state colleges and universities would place unfair financial pressure on smaller private colleges, many of which are struggling. The Covid-19 pandemic has only exacerbated this financial reality, as many tuition-dependent colleges must shrink their budgets and cut staff. Many colleges may not entirely open their campuses this fall. Tuition-free colleges at states and universities also would require states to subsidize at least part of the cost. The federal government would pay the majority of the cost, but states —which are already struggling in the wake of Covid-19 — may not have the financial resources to make college tuition-free.
Student loan forgiveness for all student loans
The next stimulus bill likely won’t include student loan forgiveness. Therefore, don’t expect student loan forgiveness any time soon. Hull doesn’t believe widescale student loan forgiveness and free college are the answer. However, he supports a different type of student loan forgiveness. Hull proposes that:
Hull views a national loan-for-service program as a win-win for students and graduates who perform national service: tuition-free college, fewer private colleges would suffer financially, less student loan debt and stronger communities. While Hull doesn’t offer details of a loan-for-service program, it appears the plan would broaden student loan forgiveness to both federal student loans and private student loans. This contrasts with plans from Sen. Bernie Sanders (I-VT) and Sen. Elizabeth Warren (D-MA), both of whom called for widespread student loan forgiveness and tuition-free college. Former Vice President Joe Biden supports tuition-free college and student loan forgiveness, although he also supports improving public service loan forgiveness. Also, this loan-for-service program might forgive student loans for frontline healthcare workers and other heroes who work full-time or part-time to serve.
How to pay off student loans faster
There are many options for student loan repayment, even if you’re not pursuing public service loan forgiveness. What’s the best way to pay off student loans faster? Start with these four options, all of which have no fees: